Assessment of digital maturity: the role of resources and capabilities in digital transformation in B2B firms

Abstract

Digital transformation is a major organisational challenge for manufacturing firms due to the extremely low success rate of such transformations to date. Capability Maturity theory suggests that firms need to develop digital transformation capability incrementally by focusing on a ‘vital few’ improvement priorities for advancing progress. The practitioner literature lacks empirical studies that validate extant capability maturity models (CMM) for digital transformation despite their importance. Moreover, there is a lack of assessment methods, and those that exist do not specify improvement points explicitly, nor prioritise them. Our research aims to address this gap through a systematic, quantitative analysis of digital capability by understanding the deployment of IT-enabled resources. Based on a sample of 302 manufacturing firms, results indicate that the digital transformation stages are punctuated by various resource-capability combinations. Results highlight that strategy- and organisation-related IT-enabled resources are the key drivers of digital transformation. We also observe that as a firm’s digital capability grows at each maturity stage, successively greater IT-enabled resources are required to support this in a stepwise function. To succeed, firms should be incentivised and supported to think beyond technology and develop five specific digital capabilities simultaneously. We also indicate the limitations that underlie our empirical work.